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Key Considerations for Australian Permanent Residents and Foreign Property Buyers

Property
 

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Foreign Buyer Surcharge - NSW 

Foreign buyers who purchase residential-related property in NSW must pay an additional 8% surcharge purchaser duty on top of any transfer duty.


If you are acquiring residential-related property in NSW as an individual (not a corporation or trustee of a trust), you do not have to pay surcharge purchaser duty if you are one of the following:


  • an Australian citizen

  • ordinarily resident in Australia.

  • an Exempt permanent resident.

  • holder of a Partner (provisional) visa (subclass 309 or 820) and meet the residence requirements.

  • holder of a Retirement visa (subclass 405 or 410) and meet the residence requirements.

  • a citizen of a nation identified as not subject to surcharge purchaser duty due to international tax treaties.


Ordinarily resident in Australia


You will be considered ordinarily resident in Australia and will not have to pay surcharge purchaser duty if:


  • your stay in Australia is not limited as to time. That is, you are:

  • a permanent resident of Australia, or

  • the holder of a partner (provisional) visa (subclass 309 or 820)

and

  • you’ve been in Australia for at least 200 days within 12 months before the date of the contract.

If you’re a permanent resident and are not considered ‘ordinarily resident’ in Australia, you may be considered an exempt permanent resident and won’t have to pay surcharge purchaser duty.


To be an exempt permanent resident, you must:


  • live in the property you are acquiring, continuously for at least 200 days within 12 months from the date of the agreement or contract

  • live there as your principal place of residence, and

  • buy as an individual, not as a company or trust.


Surcharge purchaser duty calculator: Surcharge purchaser duty calculator (nsw.gov.au) 


Foreign Owner Surcharge - NSW

If you're a foreign person who owns residential land in NSW, you must pay surcharge land tax in addition to any land tax you may already pay. You must pay surcharge on the taxable value of all residential land that you own as at 31 December each year. There is no tax-free threshold applicable to surcharge.


You are generally considered a foreign person, unless:


  • you are an Australian citizen, or

  • you have lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December, and you are a permanent resident of Australia.

The surcharge rate is:


  • 0.75% from the 2017 land tax year, and

  • 2% from the 2018 land tax year onwards

  • 4% from the 2023 land tax year onwards.

Surcharge is assessed in relation to each parcel of residential land and is proportional to ownership. There are no joint assessments and secondary deductions don't apply.


land tax

property land tax

commercial land

GST for residential properties

Purchasers are required to pay a withholding amount from the contract price at the date of settlement. This applies to:


  • new residential property

  • land that could be used to build new residential property (potential residential land).


The purchaser pays the withholding amount directly to ATO rather than to the property supplier.


GST Withholding Amount

  • 1/11th of the contract price; or

  • 7% of the contract price (margin scheme); or

  • 10% of the GST exclusive market value of the property (for sales between associated for consideration less than GST inclusive market value).

 

Tip: What happens if you re-sell the off-plan land?


  • If the land and house has been built, and it does not meet new residential property definition – No GST will be paid.

  • If you are selling off-plan land – GST may be applicable, you need to consider the impact when determine the selling price.


Foreign resident capital gains withholding

Foreign resident capital gains withholding (FRCGW) applies when selling your rental property where the contract price is $750,000 or more.


The FRCGW tax rate is 12.5%.


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